Car Lease Payment Calculator

How it works

A lease payment has two parts. The depreciation part spreads the value the car loses, the cap cost minus its residual, across the months of the lease. The finance part, called the rent charge, is set by the money factor and covers the lender's return:

• cap — the negotiated price, or capitalized cost
• residual — the car's value at lease end
• MF — the money factor (APR ÷ 2400)

A $35,000 cap cost with a $21,000 residual over 36 months depreciates about $389 a month. The rent charge on a 0.0025 money factor adds $140, for a $529 monthly payment before tax. That money factor works out to a 6% APR, which is the number to compare against a loan.

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A worked example: a 36-month lease on a $35,000 sedan

The dealer quotes a 36-month lease on a $35,000 sedan that will be worth $21,000 when you hand it back. With a 0.0025 money factor, roughly 6% APR, the pre-tax payment works out to $529 a month.

That payment splits into two parts. Depreciation, the value the car loses while you drive it, is $389 a month. The finance or rent charge, the lease version of interest, adds $140.

Together they make the $529, and most states stack sales tax on top of that.

Term length moves the number a lot. Stretch to 48 months and the payment drops to $432; shorten to 24 months and it jumps to $723, a $291 monthly swing. Longer leases cost less each month but keep you paying longer.

Enter your own price, residual, and money factor to see where your payment lands.

The three levers on a lease payment

• Cap cost. The negotiated price. Lower it and you shrink the depreciation portion of every payment, so haggle it like a purchase.
• Residual. The car's projected value at the end, set by the leasing company. A higher residual means less depreciation to pay for.
• Money factor. The lease's interest rate in disguise. Ask for it directly, convert it to an APR, and treat a markup the way you would a padded loan rate.

The two halves of a lease payment

Unlike a loan, a lease payment does not pay off the whole car, only the value it loses while you have it. That splits the payment into two clear parts, and seeing them separately makes it obvious where your money goes and which part you can push on.

• Depreciation. The cap cost minus the residual, spread across the months. This is the value the car sheds during your lease, and it is usually the larger half.
• Rent charge. The finance cost, set by the money factor on the sum of the cap cost and residual. It is the lease’s version of interest.
• Add them up. Together these make the pre-tax payment, before your state layers sales tax on top.
• Where to push. A lower cap cost trims the depreciation half, while a lower money factor trims the rent charge.

Cap cost reductions and drive-off cash

You can lower a lease payment by paying some money up front, called a capitalized cost reduction. It works like a down payment: it shrinks the amount being depreciated and financed, so every monthly payment drops. But there is a catch worth weighing before you hand over a large sum at signing.

• It lowers the payment. More cash down means less to depreciate, so the monthly figure falls.
• It is at risk. If the car is totaled early, that up-front cash is generally gone, unlike equity in a car you own.
• Drive-off costs. Leases also ask for the first month, fees, and taxes at signing, so ask for the full drive-off total rather than just the monthly.
• A low-money-down lease. Putting little up front keeps more cash protected, at the cost of a slightly higher payment.

Fees and tax the payment leaves out

The number this calculator shows is the pre-tax monthly payment, which is the right figure for comparing leases against each other. Your real out-of-pocket cost is a little higher, because a lease carries its own set of fees and a tax that the base payment does not include.

• Acquisition fee. An up-front charge from the leasing company to set up the lease, sometimes rolled into the payment.
• Disposition fee. A fee due at the end for returning the car, unless you buy it out or lease again.
• Sales tax. Most states tax a lease, often on the monthly payment, which raises what you actually pay each month.
• First payment and registration. Due at signing alongside the fees above, so budget for them separately.

Turn drive-off into a true monthly cost

The payment this calculator shows is only the base. To compare leases honestly, fold in the cash you pay at signing, called the drive-off, and spread it across the term. That gives you an effective monthly cost that captures the whole deal, not just the sticker payment a dealer likes to advertise.

• Add up the drive-off. First month, fees, and any cap cost reduction paid at signing all belong in the total.
• Spread it over the term. Divide the drive-off by the number of months and add it to the base payment.
• Compare on that number. Two leases with the same monthly payment can differ once their drive-off cash is counted.
• Watch big money down. A large cap cost reduction lowers the payment but is at risk if the car is totaled early.